Saying Goodbye To Debts Through Bankruptcy

Posted on: 28 June 2019

To make a fresh start, you can expect to begin life after a chapter 7 bankruptcy free of almost all types of debts. Getting behind on bills is only part of the problem — debt collectors can be annoying and can take punitive legal actions against you when you fail to comply with agreements to pay. While there are some debts that cannot be eliminated with a bankruptcy filing, the below debts can be discharged completely with a successful bankruptcy process. Read on for a listing of common consumer debts to which you can say goodbye to forever.

Credit Card Debt — If there is one type of debt many consumers are plagued with it's credit card debt. Cards are usually easy to acquire and the interest on the balances can pile up quickly. Unless the creditor can show that you were fraudulent in your actions when acquiring or using the credit cards, 100% of credit card debt can be discharged. That leaves you with no minimum monthly payments, interest, penalties, or balances to worry about.

Medical Bills — Unexpected medical problems are another common problem with those that file for bankruptcy. Medical care can be extremely expensive and those faced with this type of debt will encounter some particularly aggressive debt collection techniques. It's not uncommon for medical facilities to place liens on your home before you even appear for a scheduled surgery or to give birth.

Contractual Obligations — Many people don't consider the way bankruptcy can relieve you of your financial responsibility when it comes to certain types of consumer contracts. For example, if you are under contract to purchase a home, declaring bankruptcy allows you to get out of that contract without losing your earnest money deposit. Other common consumer contracts that are affected by filing for bankruptcy include:

  • Leases on rental properties (though you will need to move out).
  • Agreements to purchase furniture (though you will likely lose the furniture).
  • Agreements to provide services to others.

Legal Cases — Once you file for a chapter 7 bankruptcy, you are no longer obligated to pay judgments. For example, if you were at fault in a car accident and were sued as a result, any judgments imposed are invalided by bankruptcy. You may still be required to pay legal fees and attorney fees, however.

Personal Debts — It's common for some people to borrow money from friends or relatives when times get tough. Fortunately, you don't need to repay those personal debts once you declare bankruptcy. As a side note, you cannot choose to repay a personal debt due to embarrassment or a sense of obligation. Once you declare bankruptcy, the trustee decides who does and who does not get repaid.

To learn more about debt that can be discharged, speak to a bankruptcy attorney firm like Smythe LLP